Civilisation has operated in two ways - To make one part of society more affluent and the other more wretched than would have been the lot of either in a natural state
There are Natural Rights and Civil Rights. Life, Liberty and the Pursuit of Happiness
Where Our Power to Execute Our Natural Rights is Perfect, Government has No Legitimate Jurisdiction
When the Forces for War are Greater than the Forces for Peace   Then the World is in Danger
Politics is not a Dirty Word. It is a Way of Life. How is Your Way of Life Today ?

Farming COOP draws in its horns

Wellcome Trust signals long-term commitment

after Co-op deal

THE Wellcome Trust has signalled its intention to continue investing in British


agriculture following its record £249 million purchase of The Co-operative Group’s


farming business.


The world’s second biggest charitable foundation secured the future of The Co-


op’s Farmcare business with the biggest agri-investment deal in the UK to date


and one of the largest global deals of its kind.

Farmcare’s 15 farms, covering 15,997 hectares (39,533 acres), mainly of arable


land across the country, were put up for sale earlier this year in response to the


group’s wider financial turmoil.


The package also includes three pack houses, more than 100 residential


properties and 27 commercial properties.


All existing Farmcare management and employees will transfer with immediate


effect and the management structure will remain intact with Wellcome Trust


representatives joining the board.  


The trust, which fought off competition from major investors at home and abroad,


has pledged to invest in the business and maintain services such as Farmcare’s


educational Farm to Fork programme.


Managing director of investments Peter Pereira Gray made it clear the trust,


which spends more than £700m a year on driving improvements in human and


animal health, was in it for the long-run and was interested in more than the


asset value of the farmland and properties.


Great business


“We think it is a great business,” he told Farmers Guardian. “It is profitable, it has


scale and it plays to a number of our interests in terms of the increasing


population and food production.


“This is very much being looked at as a long-term business. We bought it as a


going concern.


“We think there is the potential to further invest in this business, given the well-


publicised constraints the original parent company had. There are real


opportunities to pick this business up and move it forward.”


Mr Pereira Gray cited potential opportunities in developing rural property,


renewable energy and tourism beyond the core food production business.


He hinted, once the trust had come to terms with its new acquisition, it could be


open to further investment in the sector.


“If something came onto the market we felt was the right thing at the right time,


Wellcome has the financial capacity to increase its exposure to this sector.


Equally, we want to digest this particular business now but I would have thought


we are more interested in grrowing it from here than in shrinking it,” he said.


Farmcare chief executive Richard Quinn described the deal as ‘tremendous’ news


for the company and its staff and ends the uncertainty about its future.


“This is a good business which is already profitable but we know we can do more


with it,” he said.


The deal has been widely welcomed within the farming industry, partly for the


continuity it brings to the Farmcare business.


At a time when  industry confidence is being hit with low prices across most


sectors, it is also being seen as a vote of confidence in the long-term potential of


the UK farming sector.


NFU president Meurig Raymond welcomed the trust’s long-term commitment.


“They must have confidence in the industry to invest that much into the largest


farming business in the UK.”


Analysis – why the deal worked


THE Wellcome Trust might not have paid the best price for the Co-op’s farms – but


it has given the troubled group and its Farmcare business the continuity and


potential for growth both strongly desired.


It was always going to be a complicated sale. It was forced, not by anything to do


with the health of the Farmcare business, but the dire financial straits the Co-op


group found itself in at the start of the year, largely due to the mismanagement of


its banking arm.


Because of the unique structure of the Farmcare business, which also supplied the


Co-op’s retail stores, the group was determined to sell it as a single entity, rather


than piecemeal.


There was plenty of interest from major investors and landowners at home and


abroad. Some, such as inventor James Dyson, would only have been interested in


taking on parts of the business.


The longer term intentions of the others were unclear.


Track record


The Wellcome Trust had the funds but also a track record in ‘managing a


sustainable investment portfolio’ for the long-run and ‘values are closely aligned


to those of The Co-operative’, said Richard Pennycook, the Co-op’s interim group


chief executive.

The trust, which is underpinned by a £16.5 billion endowment and spends more


than £700 million a year on driving improvements in human and animal health,


already owns property valued at £1.8bn, including farms in Cambridgeshire,


Hertfordshire and Cheshire.


Pledging continuity and investment, it clearly sees the purchase as more than a


property asset to accumulate wealth.


The business is important too – the farms will be required to return an


appropriate investment return over time, said Wellcome managing director of


investments Peter Pereira Gray, who will chair Farmcare’s board.


With staff and management moving over en bloc, the farms will also continue to


supply the Co-op’s stores.


The land was sold at an average of about £15,600/hectare (£6,300/acre),


including the pack houses and property, compared with average equipped


farmland prices of £27,170/ha (£11,000/acre) during the second quarter of this




Asked if he felt the Trust got a good deal, Mr Pereira Gray said: “We were


prepared to pay that price. But as I look at the quality of the business and the fact


that it was sold as whole, I think a fair price has been paid and received in the




A sign of growing investor confidence in farmland


Land agents Bidwells, which advised the Trust on the purchase, said the deal


underpinned the recent trend from investors, across the world, to acquire


agricultural land.


The latest Bidwells Agri-Investment Index (BAII) confirm that UK agricultural


property continues to out-perform all other mainstream investment asset classes. 


Rural assets let to tenants under a range of tenancy agreements delivered total


returns of 18.5% in 2013 according to BAII, matching the ‘exceptional’ return


recorded in the stock market. 


Rural returns also ‘significantly out-paced’ commercial and residential property.


Bidwells Ian Monks said increasingly investors were looking to take a strategic,


long term view.


“The Agricultural Industry must go forward with adequate funding but this scale


of investment is generally unachievable in a single deal,” he said.


“Whilst there are generally more large scale deals in parts of the world like


Australia, the Wellcome Trust’s acquisition of this farming business which covers


15,997 hectares (39,533 acres) is both rare and a sign of investor confidence.”


“The Co-operative Group’s farm business (Farmcare Trading Ltd) was an ideal fit


for The Wellcome Trust. 


“They are investors with a long-term time horizon and one that recognises the


importance of responsible stewardship to generate returns over such a timescale.”

Similar Recent Posts by this Author:

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email